TO: ALL REGISTERED THIRD PARTY ADMINISTRATORS
AND OTHER ADDRESSEES
FROM: RON TODD
COMMISSIONER OF INSURANCE
SUBJECT: SELF-FUNDED MULTIPLE EMPLOYER WELFARE ARRANGEMENTS (MEWAs)
DATE: JULY 18, 1991
The marketing and administration of self-funded Multiple Employer Welfare Arrangements (MEWAs) has been confusing to group sponsors and insureds and has been the subject of numerous regulatory disputes since the inception of the Employee Retirement Income Security Act (ERISA) in 1974. In 1981 the Kansas legislature attempted to clarify the situation by enacting K.S.A. 40-2222, 40-2223 and 40-2224 which, in essence, provides that MEWAs are subject to Kansas law and the jurisdiction of the Kansas Insurance Department unless the MEWA or its administrator can demonstrate that it is subject to the jurisdiction of another state agency or the federal government. These statutes were clearly intended to provide a means of identifying MEWAs or other employee benefit plans that qualified for the federal preemption of state law under ERISA. Unfortunately, a number of promoters of MEWAs have attempted to circumvent both federal and state statutes by claiming that qualification as a tax exempt organization under section 501 (c) of the Internal Revenue Code was tantamount to federal jurisdiction. Others have simply created a MEWA and claimed it qualified under the ERISA preemption without even contending there was a basis for doing so.
In view of this history, the purpose of this bulletin is to specifically advise all third party administrators registered in Kansas and other interested parties of the current legal environment in Kansas regarding MEWAs.
It is important to note that the 1983 amendments to ERISA also removes the federal preemption of state law with respect to MEWAs. Consequently, all MEWAs as defined by ERISA are subject to state regulation. Furthermore, the federal preemption does not apply to MEWAs even if they otherwise qualify as an employee welfare benefit plan under ERISA.
This Department will aggressively pursue violations of Kansas law by any agent, third party administrator or other persons and organizations believed to be involved in the marketing and administration of self-funded MEWAs or other health insurance plans that are subject to our jurisdiction.
If you have any questions or comments regarding the information contained herein, please direct them to the Accident and Health Division of this Department. Otherwise, please acknowledge your receipt and understanding of this bulletin.
Commissioner of Insurance